ISTAT Jetrader - Winter 2019 - 26

An Industry in Transition

An edited transcript of Dick Forsberg's keynote address at ISTAT EMEA in Berlin.

L

ife today is all about change and
managing - or at least coping with -
change. And while change is ever-present
at some level in the world we live in, the
aviation sector has been in a positive,
expansive and profitable state for almost 10
years. This is a much longer bull run than
in almost every previous industry cycle. Passenger traffic
growth has been averaging more than 6% per annum and
running above trend in eight out of the past 10 years.
Does this represent a new normal? It's probably too
early to say for sure. IATA is forecasting a return to the
5% levels of the past. My strong feeling at the moment is
that medium-term growth rates will remain closer to what
we have been experiencing recently, even as the wider
economy slows.
While passenger demand has been running well above
trend, the same can't be said of air freight, which has been
struggling to maintain long-term growth and is running well
below historical levels, despite being exposed to the same
macroeconomic global forces.

26

* T H E O F F I C I A L P U B L I C AT I O N O F I S TAT

I think the performance of air freight over the past decade
more closely reflects the uncertainties and global economic
challenges of the real world we are living in, but clearly the
changes taking place in global trade patterns have had a
radically different impact on the cargo market over the past
decade compared to the changes in passenger market forces.
So, different sectors face different challenges.
Unlike the air cargo sector, passenger load factors have
been steadily rising. They now consistently exceed 80% on an
annual basis and edge close to 100% in peak periods and busy
routes. With airlines now clearly able to figure out how to fill
seats, airline profitability has also been hitting record levels.
So, that's all good. Except that, even during the good times,
there has been a spate of airline failures, the latest example of
course being Thomas Cook, with still more in intensive care.
And although the overall industry has been enjoying
unprecedented profitability, much of this is highly
concentrated. With 45% of industry's profits generated by
North American carriers, many airlines around the world
continue to exist on slim margins or are losing money,
including some with big names and franchises. This leads
ISTAT Jetrader - Winter 2019

Table of Contents for the Digital Edition of ISTAT Jetrader - Winter 2019
